PepsiCo Inc.’s bottling unit, Pepsi Beverages, has agreed to settle federal racial-discrimination charges as well as pledged to provide job training and new roles, according to the U.S. Equal Employment Opportunity Commission.

PepsiCo Inc. provided a statement that said the EEOC did not find any intentional discrimination. However, the company’s former criminal background check policy disproportionately barred approximately 300 black job applicants from employment. The EEOC, which enforces employment discrimination laws, said in a release that based on an investigation, “found reasonable cause to believe” that PepsiCo Inc.’s former criminal background check policy discriminated against black people.

The former policy and practice exercised by the company used the checks to screen out job applicants who had arrest records – even if they were never convicted of a crime. The policy resulted in limiting job opportunities for minorities, who statistically have higher arrest rates than whites.

The monetary settlement is being allocated in part to the claims process but primarily to division amongst black applicants for new positions at Pepsi. The company has also agreed to submit regular reports to the EEOC on its hiring process and offer anti-discrimination training to hiring managers.

Read EEOC press release: http://www.eeoc.gov/eeoc/newsroom/release/1-11-12a.cfm

HR Professional Opinion:

(The comments below are part of First Contact HR’s opinion column where we offer the writer’s opinion on this post’s specific topic and thus should not be taken as legal advice.)

While it is unfortunate, PepsiCo Inc. was faced with claims of discrimination; it is commendable that the company has recognized its discriminatory policy and is taking steps towards creating a more diverse work environment. In the case of hiring, the EEOC clearly states: “There is no Federal law that clearly prohibits an employer from asking about arrest and conviction records. However, using such records as an absolute measure to prevent an individual from being hired could limit the employment opportunities of some protected groups and thus cannot be used in this way.”

Pepsi overlooked this guideline, which could have been avoided had their HR department worked with a background screening company that could make sure their screening policies were aligned with the EEOC guidelines. Pepsi’s former policy not only limited employment opportunities for minorities by considering arrest records as a component of background screening, it also failed to take into consideration the applicant’s arrest as it related to the specific job.

First Contact HR advises its clients to only consider criminal conviction records that are job related before taking any adverse action against job candidates. Further, First Contact HR recommends employers always exercise good judgment and proposes the following ten (10) criteria for employers to consider when criminal record hits are discovered in background screening reports:

1. The nature, extent and seriousness of the conduct /conviction;
2. The circumstances surrounding the conduct;
3. The frequency of the conduct;
4. How recently the conduct occurred;
5. The individual’s age and maturity at the time of the conduct;
6. The presence or absence of rehabilitation and other pertinent behavior changes;
7. The potential for pressure, coercion, exploitation, or duress;
8. The likelihood of continuation of the conduct;
9. How, and if, the conduct bears upon potential job responsibilities; and
10. The individual’s employment history before and after the conduct.